Question

which choice is correct

The consumer price index measures: Multiple Choice O The prices of a fixed basket of goods and services in the United States O The prices of goods and services in Bolivia O The average change in prices of a fixed basket of goods and services of urban consumers C ) The change in prices of a fixed basket of goods and services around the world

Answer 1

Consumer Price Index (CPI) measures the average change in prices of fixed basket of goods and services of urban consumers.The Consumer Price Index (CPI) measures the changes in the cost of a basket of goods and services consumed by the average urban household.The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them. Changes in the CPI are used to assess price changes associated with the cost of living; the CPI is one of the most frequently used statistics for identifying periods of inflation or deflation. Option 1 and 2 are incorrect as CPI is not only for United States or Bolivia. It can be measured for any economy. Option 4 is incorrect as CPI is a weighted average measure of prices of basket of goods and services. So, Option 3 is the best and correct option.